Government unveils plan to cut fuel bills

Big changes in the way Britain organises its electricity production were announced yesterday to meet the triple challenge of climate change, high bills for householders, and security of energy supply.

The ultra-free market which has been in place since electricity was privatised 20 years ago is to be drastically modified, with the Government offering generating companies long-term contracts at fixed prices to produce low-carbon power – that is, from renewable sources and nuclear installations. Going back to what is effectively a form of central planning is seen as essential to attract the huge investment – £110bn over the next decade – which is needed to replace Britain's ageing energy infrastructure.

The programme will put about £160 per year on to the average energy bill by 2030, the Energy and Climate Change Secretary, Chris Huhne, said yesterday, compared to £200 without the changes.